Randal Quarles, the Federal Reserve official who oversees Wall Street, says central banks are a long way off from embracing crypotcurrencies as a means of paying for things.

And with the price of bitcoin gyrating massively, he added that the digital-currencies movement could be dangerous for the financial system, particularly as it grows larger.

“Without the backing of a central bank asset and institutional support, it is not clear how a private digital currency at the center of a large-scale payment system would behave, or whether the payment system would be able to function, in times of stress,” Quarles, the Fed’s newly minted vice chairman for supervision, said in remarks prepared for a Thursday conference at the U.S. Treasury Department.

He also urged that other central banks take a cautious approach to cryptocurrencies.

“Digital currencies are a niche product that sometimes garners large headlines," he said. “But from the standpoint of analysis, the ‘currency’ or asset at the center of some of these systems is not backed by other secure assets, has no intrinsic value, is not the liability of a regulated banking institution, and in leading cases, is not the liability of any institution at all.”

To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net.

To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, William Selway